Failure to comply with tender conditions warrants legal blacklisting, with no arbitrariness in authority's decisions.

1. This writ petition is filed by the petitioner a company registered under the Indian Companies Act, 1956, engaged in manufacture and supply of pharmaceutical products, challenging Ext.P12 order passed by the Kerala Medical Services Corporation Ltd., blacklisting the petitioner for a period of three years and Ext.P14 order passed by the State Government in the appeal preferred by the company, affirming the order of the 2nd respondent. Material facts for the disposal of the writ petition are as follows:

2. Petitioner was a successful bidder for the supply of pharmaceutical products to the 2nd respondent for 30 drugs for the year 2016-17. In terms of Clause 6.22 and Clause 6.23 of the tender document, petitioner had furnished required security deposit and entered into agreement with the 2nd respondent, evident from Ext.P2. It is the case of the petitioner that, it had been supplying pharmaceutical drugs as per the purchase orders issued by the 2nd respondent, promptly While so, 2nd respondent as per Ext.P3 letter dated 20.03.2017 informed the petitioner that purchase orders in respect of Fluphenazine Decanoate ING IP 25 mgl ML Amp, Haloperidol ING IP 5mg / 1 ML Amp, Phenytoin Sodium ING USP 50 mg / ML 2ML Amp, Promethazine Inj IP 25 mg / ML 2ML Amp and Vitamin B12 / Cyanocobal amin Inj IP 100 mg / ml 2ML Amp were cancelled and 10% penalty was levied from the petitioner as per Clauses 5.1.4 and 6.31.3 read with clauses 6.26.21 and 6.31.7 of the Tender document.

3. While so, on 06.04.2017, the 2nd respondent issued Ext.P4 show cause notice to the petitioner requiring the petitioner to show cause as to why blacklisting action as contemplated under clause 6.26.24 of the tender document should not be taken against the petitioner for failure to execute supply of the drugs for which purchase order had been issued. In Ext.P4 show cause notice, 5 drugs were alleged to be not supplied. In Ext.P4, the 2nd respondent required the petitioner to submit its written statement within 15 days from the date of receipt of the communication. Accordingly, Ext.P5 reply was submitted, explaining the circumstances under which the drugs could not be supplied by the petitioner. Anyhow, thereafter petitioner was directed to appear for a personal hearing on 24.05.2017 at the Head Office of the 2nd respondent. Petitioner has also submitted Ext.P7 letter dated 24.05.2017, after the personal hearing enclosing invoices dated 14.03.2017 and the Courier dockets dated 20.03.2017. However, according to the petitioner, without considering any of the aspects put forth by the petitioner, as per Ext.P8 order, petitioner was blacklisted, consequent to the default in the supply of the following products:
"i. Lorezapam injection as per purchase order dated 28.03.2016.
ii. Haloperidol Injection as per purchase order dated 10.11.2016.
iii. Promethazine Injection as per purchase order dated 13.12.2016".

4. As per letter dated 07.07.2017, petitioner pointed out that there was apparent error in the blacklisting order in as much as the actual quantity for e - token in respect of Haloperidol injection, consequent to which, 2nd respondent was convinced that there was an error in calculation of the quantity for which e - token for the aforesaid drug was requested. Thereupon, Ext.P8 order was revoked as per Ext.P9 dated 15.07.2017. On the basis of Ext.P9, petitioner was served with Ext.P10 show cause notice to which petitioner has submitted Ext.P11 reply, and a personal hearing was conducted on 02.08.2017. Thereafter, petitioner was blacklisted as per Ext.P12 order and being aggrieved by the same, an appeal was preferred before the State Government in accordance w